Markets surged again today despite a second straight day of weak economic data -- specifically, worse-than-expected factory and consumer confidence numbers. Before we answer why the market is contradictorily soaring, let's take a closer look at how the three major indexes are fared and at a couple of stocks making headlines.
Index |
Gain / Loss |
Gain / Loss % |
Ending Value |
---|---|---|---|
Dow Jones Industrial Average |
115.26 | 0.91% | 12,767.17 |
Nasdaq |
36.47 | 1.29% | 2,872.80 |
S&P 500 |
13.74 | 1.03% | 1,342.84 |
Source: Yahoo! Finance.
We saw strong performances across the board as both the Nasdaq and S&P 500 both gained more than 1%, while the Dow's lagging performance is due to the technology's 0.5% gain lagging all other sectors. Finally, the markets' "fear index," the VIX
The elephant in the room remains Sunday's critical Greek elections. If the far-left Syriza wins, it could spell trouble for the eurozone. That party's leaders insist they wish to remain on the euro, but they want to rip up the current austerity deal.
Amid all this potential chaos and negative news, why are markets up? Bad news for the economy is good news for investors if the Federal Reserve is forced to undertake another round of quantitative easing. Furthermore, it's rumored that central banks are preparing to prop up the markets should the new Greek government spook investors.
So will the Dow's recent gains suddenly vanish next week? Quite easily, if rumors of central bank intervention turn out to be just that or if the Fed continues flirting with monetary intervention instead of committing to it. While smart investors are greedy when others are fearful, jumping headfirst into this rally could burn short-term investors.
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